New Mercedes-Benzboss Zetsche aims to lift earnings
TO CUT 5,000 JOBS
SOUTHFIELD, MICH. • After four weeks in the post, MercedesAG chief Dieter Zetsche intends to eliminate at least 5,000 jobs to help revive profit at the DaimlerChrysler AG luxury car division, people familiar with the plan said.
The supervisory board of DaimlerChrysler, the world’s No. 5 automaker, is scheduled to announce the job cuts, representing at least 4.7% of the workforce, today after a two-day board meeting in Auburn Hills, Mich., said company officials who didn’t want to be identified.
Mr. Zetsche left DaimlerChrysler’s Chrysler division on Sept. 1 for a four-month stint at Mercedes before he takes over as chief executive of the parent.
DaimlerChrysler faces slumping demand for the MercedesBenz E- Class sedan, the model that contributes the most to profit. Mercedes reported its first quarterly loss in 13 years in the first quarter, and profit fell 98% in the second. The company is also spending US$ 1.45- billion to reorganize its Smart small- car unit.
“ The cost discipline in the recent past wasn’t strict enough,” said Michael Raab, an auto analyst with Sal Oppenheim in Frankfurt. He estimates the cuts will cost DaimlerChrysler ¤150-million to ¤250-million (US$180.1million to US$300.2-million) and save ¤ 200- million to ¤ 250- million annually in reduced labour costs.
A DaimlerChrysler spokesman declined to comment on the job cuts or board meeting. Mercedes had 106,000 employees worldwide at the end of last year, including 93,000 in Germany, according to DaimlerChrysler.
Mr. Zetsche eliminated 40,000 jobs from 2000 to 2004 to help Chrysler return to profit in the United States. He will take over at Stuttgart, Germany-based DaimlerChrysler when CEO Juergen Schrempp retires. In the first six months of this year, Chrysler had an operating profit of US$963-million, and Mercedes reported a US$ 1.1- billion loss.
DaimlerChrysler joins Volkswagen AG, Siemens AG and other German companies in cutting jobs in their home market. Western German manufacturers’ wage costs are the world’s secondafter Denmark, weighing on economic growth, according to the IW economic institute in Cologne, Germany. Unemployment in Germany rose to a record 12% in March.